Whose anecdote will it be this time?

Within the Living Standards Measurement Study (LSMS) team, the anecdote goes that in the late 1970s World Bank President Robert McNamara, while reading through the first World Development Report, was stunned to discover that only a handful of countries were collecting any data for the reporting of poverty figures. He found this situation unacceptable and initiated an effort that among other things resulted in the creation of the LSMS, which has ever since been at the forefront of the global effort to improve the availability and quality of poverty numbers. Whether the anecdote is true or legend, the message it conveys is clear: it took a visionary (or frustrated!) leader, supported by a committed institution and international community, to make a significant impact towards the production of regular and high quality poverty estimates. Household surveys in general, and consumption surveys in particular, are the sole source of information for poverty estimates, and without periodic household surveys, countries and donors alike remain largely unaccountable for investments made to combat poverty and hunger.

Truth be told, since the McNamara days, much has been achieved both in terms of data availability and new methodologies to measure and monitor poverty. The small handful of countries with poverty data from the late 1970s have since been joined by all but a few countries, with many countries now conducting household surveys on a regular basis and reporting progress on poverty reduction at an acceptable periodicity. However, these accomplishments leave little room for complacency. As pointed out in a recent blog posting on the Brookings website, while 43 of 49 Sub-Saharan countries have now conducted at least one household survey, for half of those, the latest survey was carried out more than six years ago. Furthermore, it is often the case than even when multiple data points exist, the lack of comparability across surveys within a country makes documenting trends virtually impossible. Knowledge gaps in the establishment of global standards and best practices on how countries measure poverty make comparability across countries an even more elusive goal.

Clearly, given the current state of affairs, the quality of many of the existing survey instruments would benefit from an infusion of innovative methods, new technologies and, of course, cash! For example, consider the measurement of food consumption. In most developing countries, food consumption, whether from purchased food or from own-production, still represents the considerable share of total consumption expenditure, which is the preferred measure of monetary welfare. But, what is the preferred method to collect consumption information? What is the correct recording period? How should we best handle non-standard units and account for the condition of the acquired food items? In addition to lingering ambiguity on the resolution of these longstanding issues, the landscape is also changing, and changing rapidly, introducing new challenges to the measurement of consumption and poverty. For example, as countries develop and urbanize, diets become more diversified. As a result, a greater share of total consumption comes from processed foods and food consumed outside of the home, making quantification considerably more difficult.

Sadly, innovation and methodological development in data collection has not kept pace with the changing landscape and increasing demand. As the MDG deadline approaches, the international community will be reminded, once again, that setting targets without putting adequate emphasis on the methods and information requirements for measuring progress towards those goals may be a fickle tactic.

As in the 1970s, the World Bank again has a pivotal role to play in spearheading a new global effort, in collaboration with key development partners, to continue improving the availability and quality of household survey data to measure progress towards the eradication of poverty and hunger. Improving consumption surveys across the globe via renewed attention to high-quality data collection and continued methodological improvements could have the proverbial effect of ‘killing two birds with one stone’. On the one hand, better and more frequent consumption surveys will have an immediate effect on the improvement of Global Poverty estimates, such as those published by the World Bank. On the other hand, improving the availability and quality of consumption data will make a significant contribution to the ongoing effort by the Food and Agricultural Organization of the United Nations (FAO) to revise its methodology for the measurement of hunger, another MDG target. While exclusive reliance on household surveys to measure hunger is unlikely to be a feasible option in the near future, better and more frequent information on food consumption for a larger number of countries will certainly be a game-changer in revising the current FAO methodology. And there is perhaps an opportunity to kill a third bird with the same stone: as advocated in a recent article1 , improving consumption surveys may also prove to be a windfall for the nutrition community, which has been struggling with the lack of adequate consumption data to inform sound evidence-based nutrition policies.

It is imperative for the international community to agree on a path forward on how to improve the availability, quality and comparability (both across countries and over time) of consumption expenditure data coming from a plethora of often incoherent household surveys carried out across the globe. This effort must include a robust research agenda to field validate alternative methodologies and better understand the implications of collecting poverty data in different ways, in an attempt to restore comparability where it is lacking. And as we focus on new multidimensional concepts of poverty, novel household survey instruments are needed to meet the new challenges. Household surveys are the backbone of national statistical systems and provide the information base for a multitude of needed indicators – such as poverty and hunger measurements – as the international community and countries increasingly emphasize performance-based and result-oriented actions. What is needed is a new, coherent global initiative with a clear mandate and adequate resources to promote and “certify” household survey data quality standards for the measurement of poverty in its many dimensions. The strategy would encompass a sound research component, combined with strong country presence through coordinated technical assistance and training in household survey methods. But what should the World Bank’s role be in leveraging efforts towards the creation and maintenance of such a public good and how we, as an international community, come together to create this new “coalition of the willing”? On our side, in the LSMS team we look forward to telling the new anecdote for many years to come.

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Following the publication of the United Nation 1968 A System of National Accounts, prepared by Richard Stone and his UN Statistical Office co-author, Abraham Aidenoff, Aidenoff began work on recommendations on statistics of the distribution of income, consumption and wealth. These were eventually published, with reservations from the Statistical Commission’s country delegates, for whom household surveys and poverty statistics were, at that time, something of a novelty, as the United Nations Preliminary Guidelines on Statistics of the Distribution of Income, Consumption and Accumulation of Households, Series M, No. 61. Unfortunately, follow-up and collaboration among countries and agencies in their adoption and implementation in developing countries were sadly lacking. Quite different views, agendas and turf to protect and colonize household survey work in developing countries took hold among the United Nations National Household Survey Capability Programme, the World Bank’s Living Standards Measurement Study programme, and ILO’s responsibility for cost of living statistics, not to mention FAO’s food consumption and nutrition surveys, followed in later years by the United States-sponsored Demographic and Health Surveys and Unicef’s Multiple Indicator Cluster Surveys. Many of these have made major contributions in their own fields of concern but the plethora of advice must have been quite bewildering to any developing country statistician interested in developing statistics on the distribution of income, consumption and poverty and a coherent national or international strategy was never worked out for household surveys to collect these data. Without tested and accepted international statistical standards and recommendations to work from, and clear objectives in a survey programme to work toward, coverage and consistency of income, consumption and poverty statistics has been quite limited, as Gero points out.
Of course the Bank’s Martin Ravallion and his colleagues have worked heroically and conscientiously to develop the $1/day estimates, doing the best they can with what’s available, but it is time to go beyond international estimates, which countries find opaque, to a common strategy for countries to collect and compile the needed data using agreed guidelines and on a regular basis. The international recommendations for statistics of the distribution of income, consumption and poverty need to be revised in common by the concerned agencies, as the 1968 SNA was in its 1993 revision, to serve as a thought-through starting point for practical handbooks for developing countries and agencies to use in planning these aspects of their survey programmes.